Restricted free agent

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A restricted free agent is a certain athlete who plays in the NHL. Such players have special restrictions on the terms under which they can retain or change employment status with their athletic club teams.

The current team must extend a "qualifying offer" to a restricted free agent to retain negotiating rights to that player.

Players who earned less than $660,000 in the previous season must be offered 100 percent of last season's salary. Players making up to $1 million must be offered 105 percent. Players making over $1 million must be offered 100 percent.

In addition to the preceding outcomes, if a player accepts a qualifying offer, he goes with that team.

Salary arbitration. A team or player can file for salary arbitration as a mechanism to resolve or settle contract disputes. The deadline to file a salary arbitration request is July 5, with cases heard in late July or early August. After the arbitrator's verdict is rendered, the team must take a decision within 48 hours of the verdict. If the team walks away, the player then becomes an unrestricted free agent.

A team can take a player to arbitration once in his career, and cannot ask for a salary reduction greater than 15 percent. Players can ask for salary arbitration as often as they want. It is noted that a player going through salary arbitration cannot sign an offer sheet. Players need to have played a minimum of four seasons in the NHL to be eligible for salary arbitration, unless the player signed its first NHL contract after the age of 20.

The team matches the offer sheet. When an offer sheet is signed, the player’s current (original) team is notified. The original team cannot negotiate a new contract under different terms or trade the player’s rights and has seven days to makes its decision; that team can keep the player under the terms of the offer sheet, or decline and let the player join the new team under those terms. In the former case, the player cannot be traded for one year.

The team declines to match the offer sheet. If the original team declines the offer sheet and loses the player, it receives draft picks from the player’s new team as compensation. Compensatory draft picks are determined by the player’s new salary, on a sliding scale.

For example:

In 2008 a team signing a restricted free agent to a salary averaging $2,615,625 to $3,923,437 per season will lose a first-round draft pick and a third-round draft pick to the player’s old team.

Signing a restricted free agent to a contract worth over $6,539,062 per year costs a team four first-round draft picks.